Stabilization while waiting for Powell (Daily analysis 27.08.2020)

The climate in the French industry increased more than expected in August, although it is still far from pre-pandemic levels. The EUR/USD exchange rate stabilizes around 1.18 before the Federal Reserve Chair's speech. The zloty in a small volatility range.

The dollar awaits the most important event today

Thursday morning was characterized by small changes on the currency market and on the broader market. The current week did not bring any more significant events or macroeconomic publications that could cause greater deviations from the trend we have seen in recent weeks.

Such events, however, will take place this afternoon in the form of a speech by Jerome Powell (the Chair of the Federal Reserve) at the economic conference that traditionally takes place in Jackson Hole every year. However, so far, we have learned macroeconomic data from France, perhaps not of such high relevance, but showing positive economic trends.

According to the National Institute of Statistics and Economic Studies (INSEE), entrepreneurs' confidence indexes rose to 93 pts. in August, marking a clear increase of 11 pts. from July's level, and above expectations of 86 pts. Although this is still far from pre-pandemic levels (100.8 pts. in February), greater optimism among French companies may at least overshadow the disappointment after weaker than expected PMI data for August published on Friday.

This has resulted in a somewhat mixed picture of the current economic situation, both in the eurozone and in the US. Moreover, it coincides with the increase in the disease in both regions, limiting the increase in activity. As a result, there are relatively small fluctuations in the currency market - after a strong increase in the EUR/USD exchange rate to close to 1.20, the main currency pair fluctuates around 1.18 while waiting for a stimulus that could take it out of the narrow range that we have seen in recent days most notably.

For the zloty, such a limited range of market fluctuations also means stabilization, supported by solid macroeconomic data from the economy. However, if we look at its volatility over the last four weeks, it is limited. In relation to the dollar, the zloty gained 0.02% during this period, and to the globally stronger euro it lost only 0.42%. The EUR/PLN quotations oscillated around 4.41 in the afternoon, and the USD/PLN was just under 3.74.